Question

Exercise 8-05 The ledger of Shamrock, Inc. at the end of the current year shows Accounts Receivable 589,000; Credit Sales $845,000; and Sales Returns and Allowances $38,000. (a) If Shamrock uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Shamrock determines that Matisse's $750 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,300 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 11% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable. Prepare journal entries to record the above transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit No. Date Account Titles and Explanation (a) Dec. 31 (b) Dec 31 (c) Dec. 31

Answer 1

Answer: No. Credit Date Dec31 Debit 750 750 Dec 31 8,490 Accounts Titles & Explanation | Bad Debts Expense Accounts Receivable Bad Debts Expense Allowance for Doubtful Accounts [($89,000 * 11%) - $1,300] Bad Debts Expense Allowance for Doubtful Accounts [($89,000 * 9%) + $500] 8,490 Dec 31 8,510 8,510